French insolvency proceedings 2025: safeguard, reorganization and liquidation complete guide

French insolvency proceedings 2025: safeguard, reorganization and liquidation complete guide

French insolvency law, codified in Book VI of the Commercial Code, organizes a graduated set of judicial procedures designed to anticipate, treat or resolve the financial difficulties of companies. Three main collective proceedings exist: safeguard (sauvegarde), judicial reorganization (redressement judiciaire) and judicial liquidation (liquidation judiciaire). To these are added confidential out-of-court proceedings (ad hoc mandate and conciliation) and the accelerated safeguard introduced by the 15 September 2021 ordinance transposing EU Directive 2019/1023.

1. The classification criterion: cessation of payments

The triggering criterion is the cessation of payments (cessation des paiements), defined in Article L. 631-1 as the inability to meet due liabilities with available assets.

• Before cessation of payments → safeguard, ad hoc mandate, conciliation
• At or after cessation of payments (within 45 days) → judicial reorganization or liquidation

This classification structures the entire French insolvency landscape and conditions the protection available to the director.

2. Safeguard (sauvegarde) — Articles L. 620-1 et seq.

The safeguard is opened at the request of the debtor experiencing difficulties it cannot overcome, but without being in cessation of payments.

2.1. Opening conditions

• Difficulties the company cannot overcome alone
• No cessation of payments at the date of the petition

2.2. Effects

• Suspension of individual creditor actions
• Continuation of the activity by the director, who remains in place
• Appointment of a judicial administrator (assistance) and a judicial agent
• Observation period of up to 12 months
• Adoption of a safeguard plan for up to 10 years

2.3. Accelerated safeguard (Article L. 628-1)

Reformed in 2021, it allows for ratification of a restructuring agreement negotiated during conciliation in 2 to 4 months. Voting takes place by affected-parties classes under the EU Directive 2019/1023 framework.

3. Judicial reorganization (redressement judiciaire) — Articles L. 631-1 et seq.

Reorganization is opened when the company is in cessation of payments but its situation is not irremediably compromised.

3.1. Opening

• On the director's petition within 45 days of cessation of payments
• On a creditor's petition
• On the public prosecutor's petition
• Ex officio by the court (since 2014, only after a previous procedure)

3.2. Course

• Observation period of 6 months, renewable up to 18 months
• Inventory, social and economic report
• Verification of claims
• Drafting of a continuation plan or, in default, search for buyers (sale plan)

3.3. Outcomes

• Continuation plan of up to 10 years (15 years for agricultural activities)
• Sale plan under Article L. 642-1
• Conversion to liquidation if recovery is impossible

4. Judicial liquidation (liquidation judiciaire) — Articles L. 640-1 et seq.

Liquidation is opened when the company is in cessation of payments and its recovery is manifestly impossible.

4.1. Effects

• Cessation of activity (except temporary continuation, max. 3 months renewable)
• Appointment of a judicial liquidator
• Realization of assets by sale (judicial sale plan, asset-by-asset, auctions)
• Distribution of proceeds to creditors according to ranking
• Closing of operations for insufficiency of assets or after passive payment

4.2. Simplified liquidation

Reserved for very small companies (no real estate, fewer than 5 employees, turnover < €750k): simplified procedure capped at 6 to 15 months.

5. Out-of-court preventive proceedings

5.1. Ad hoc mandate (Article L. 611-3)

Strictly confidential procedure, no time limit, no condition relating to cessation of payments. The ad hoc representative assists the director in negotiating with creditors.

5.2. Conciliation (Article L. 611-4)

Confidential procedure, max. 5 months, available even if cessation of payments occurred less than 45 days before. The conciliator negotiates an agreement that may be:

• Acknowledged (constaté) by the President of the Court — confidentiality preserved
• Approved (homologué) by the court — generates the conciliation privilege (Article L. 611-11) and new money protection

6. Implications for foreign creditors and groups

For groups operating internationally, several points are key:

• EU Insolvency Regulation 2015/848: COMI presumption for the registered office
• Filing deadline extended to 4 months for foreign creditors (Article R. 622-24)
• Personal notification obligation for creditors holding a published security
• Cross-border cooperation mechanisms with foreign main proceedings

7. Director liability across the procedures

• Action for insufficiency of assets (Article L. 651-2): personal liability for management faults having contributed to insufficiency of assets
• Personal bankruptcy (Articles L. 653-3 et seq.): 5 to 15 years management ban
• Management ban (Article L. 653-8): notably for late filing
• Criminal bankruptcy (Articles L. 654-1 et seq.): fictitious accounts, asset diversion, preferential payments

8. Mac Mahon Avocats: end-to-end French insolvency support

Mac Mahon Avocats supports French and international companies, directors, shareholders and creditors throughout the entire spectrum of French insolvency proceedings: from preventive ad hoc mandate to going-concern sale, before the Commercial Courts of Paris, Nanterre and Bobigny.

Legal sources: French Commercial Code, Book VI; Ordinance no. 2021-1193 of 15 September 2021; EU Directive 2019/1023; EU Regulation 2015/848.